Early Childhood Articles

Department Of Labor Audits Child Care Programs: Requires Back Payment of Wages by Susan Peterson Executive Director Early Childhood Directors Association To date the Early Childhood Directors Association (ECDA) is aware of at least eight separate child care audits by the Minnesota office of the Federal Department of Labor (DOL). Of the businesses audited by the DOL, five were multiple site businesses, and three were single site programs; all but one were owner operated. ECDA would like to impress upon providers that there will be serious ramifications for programs in Minnesota in particular, but nationwide as well, that are audited by the Department of Labor. For example, in the February 6th issue of the Minneapolis Star Tribune's business section, Children's World was said to "have been fined more than $400,000 for failing to pay employees for attending training and other work-related events". Programs need to be aware of and comply with the Federal Labor Laws (or be prepared to defend your position of noncompliance). These include paying staff for time spent in any work related activities such as inservice training, parent parties, staff meetings, drive time between programs, etc., and that any time beyond 40 hours in a week must be paid at the overtime rate of 1.5 times the employee's regular rate. Employers may not salary employees to avoid overtime payment as the DOL does not view child care staff as professionals. The ECDA had the opportunity to talk with two program owners regarding the Department of Labor audits: one who has completed an audit and one in the midst of an audit. The first received a letter last August from the DOL which gave her three weeks to pull together information regarding employees hours, wages, etc. Her audit stemmed from an employee complaint. The employee had been working at multiple sites which the director regarded as working different jobs and therefore did not pay overtime. She thought she was doing the employees a favor by allowing them to work extra hours. The director and other staff had to go through time cards and training records for two years to calculate overtime. The DOL threatened audits by other departments such as immigration. They also said that she could be held personally liable for fines which they threatened but did not collect. To add to their frustrations, the director and staff arrived late at the DOL office because they were given the wrong address. Upon arrival, they were admonished for being late. The owner ended up paying out back wages of approximately $12,000. In addition, if an employee was awarded over $200 in back pay the check had to be sent certified mail, adding additional costs for the provider. The second owner relayed a similar experience with the DOL. Her letter arrived dated December 8th with directions that she needed to provide some background information by the 28th. The DOL told her that they were not at liberty to say whether the audit stemmed from a complaint or was a random visit. Her center was visited on January 11th. The DOL employee asked to see records and wanted to interview employees. The owner stated that she would not pull employees from their classrooms to which the DOL replied that they would call employees that evening. No response was given when the owner asked if she was responsible for paying them for the interview time since it was "work related". In response to her question about whether she was required to know what her employees did outside of work, she was told that she was indeed liable for her employees 24 hours a day and needed to pay her employees if they worked at home since she "permitted" it. Both owners described the DOL as intimidating, unpleasant, and intentionally hostile. Although the Minnesota office of the Federal DOL is investigating programs within the state, their laws do apply to the child care industry nationwide. Again, the ECDA encourages all child care programs to become familiar with these laws. If you would like further information about the DOL, please either call the ECDA office: 641-6643 (St. Paul area), 800-925-3232 (out of state), or look at our ECDA page in the Earlychildhood.com resources.